Physical Gold Bullion Demand Picks Up as India Strike Ends

Gold bullion prices drifted down to $1.642 per ounce during Tuesday morning's London trading – though still slightly up on last week's close following gains in Asia – while stocks fell and commodities were flat as markets digested last Friday's disappointing US jobs data.

"Major support [for gold] comes from the long-term uptrend, which is still intact, currently around $1600," says the latest technical analysis note from bullion bank Scotia Mocatta.

Based on PM London Fix prices, however, gold bullion remains below its 200-day moving average, which was $1,687 per ounce following the last fix before the Easter break on Thursday.

Silver bullion meantime dipped to $31.49 per ounce before recovering some ground by Tuesday lunchtime in London, remaining broadly in line with where it began the week.

Over in Vietnam meantime, reports reaching BullionVault over the weekend suggest that many jewelry shop owners will close their business when a new government decree comes into force next month, since they fail to meet specified criteria to operate in the industry.

European stock markets traded lower Tuesday morning, with both the FTSE in London and Germany's DAX down 1% by lunchtime. The losses come after US markets sold off on Monday, following the publication on Friday of worse-than-expected US jobs data.

Nonfarm payroll data published by the US Bureau of Labor Statistics Friday show that the US economy added 120,000 nonagricultural private sector jobs in March – compared to analysts' consensus estimates of over 200,000 – prompting speculation that the Federal Reserve might consider another round of quantitative easing.

Despite this speculation, gold prices remain below where they started last Tuesday, before the publication of Federal Open Market Committee minutes that appeared to suggest Fed policymakers have become less inclined towards additional QE.

"It looks like we need bigger and better news to support gold right now," says Ole Hansen, senior commodity manager at Saxo Bank.

"Traders have been wrong-footed on numerous occasions during the last two months on QE on/off talks...The non-farm payrolls and India ending the strike should have triggered a stronger bounce, but at this moment... traders want to see the cash before jumping back into gold in a major way."

About the Author

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.